How profitable is Forex trading?

Is Forex trading still profitable?

If you are a new investor, it’s normal to ask yourself if Forex trading is profitable, given all the news regarding the risk level, the high percentage of traders losing money and the difficulties of trading on the foreign exchange market. Forex’s market has maintained exponential growth since its origin and attracts more and more investors.

To start trading, you must have some basic knowledge of the currencies market. Therefore, you must try to obtain as much information regarding the market as you can to acquire acquiring knowledge and skills that will allow you to create strategies and have data that will be useful for you to improve your investments.

How to trade on Forex?

Investing in Forex can be very profitable, but it all depends on the investor’s level of experience and on its negotiating skills. If you are a Forex trader that knows how to apply the right strategies, this market can be very rewarding. However, in order to do this, you must devote a lot of time to it and learn how to trade on currencies.

Forex requires practice, study and dedication, as well as being able to carry out a good market analysis.

A tip: if you’re just starting out, invest small amounts, then when you have more practice and you know how to trade on Forex, you can invest a little bit more. Remember that Forex is a very liquid market but it’s also very volatile. Therefore, you can earn a lot but also lose a lot.

What is the average profit for trading on Forex?

This is the question that every trader asks themselves when they are first faced with the world of Forex trading. There is no definitive answer but there are various parameters that must be taken into consideration. However, we can think in percentage terms by analysing the trading methods offered by the Forex market.

On average, with a long-term operation, a professional trader is able to obtain monthly performances of 5% to 7%, excluding drawdown periods, not calculating taxes and with a starting capital of around £1700.

With intraday or scalping operations, the profit margin goes up considerably, but it requires more discipline and better technical training. If you decide to use a scalping strategy, you can earn more even with modest capital investment.

Trading Forex vs trading stocks: which is more lucrative?

Now we will compare trading Forex vs trading stocks to understand which is more profitable. Trading Forex involves much more financial leverage and less regulation compared to trading stocks, which makes it highly profitable but also riskier. Monitoring the Forex market is often easier than monitoring stock markets since there are only 18 common currency pairs to trade as opposed to thousands of potential stocks. A disadvantage of Forex trading compared to trading stocks is that it takes place 24 hours a day. This means that you could be forced to work at not convenient times to make certain exchanges.

Forex and trading stocks are very different types of trading based on short-term stock prices. For this reason, when choosing between stocks and Forex, you must choose wisely based on your objectives, disposable income and your tolerance for taking risks.